Thursday, December 27, 2007

Condominium Conversions: Owner Equity at Risk?

Why We Should Stop Converting Old Apartments to Condos.

Condominium conversions, a really bad idea, are here again. You don’t need statistics to tell you that condominiums converted from old apartment houses have been all the rage for several years. Just look around. Numerous apartment buildings are being sold as condominiums. We saw it twenty years ago when home prices in California experienced the same kind of super heated run-up that we’ve seen in the first part of this decade. Anything with a door and a roof sold quickly, often with multiple offers. The market has cooled now, but builders with homes to sell made a lot of money...however, the price of admission was often misrepresented. How so? If the actual reserve and operations assessments are many times more than was actually stated by the converter, the association will have to face the possibility that they will never accumulate enough money to maintain the project...

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